TOKYO — A quarterly business outlook survey by Japan’s central bank shows corporate sentiment has worsened for the first time in two years.<\/p>\n
The Bank of Japan’s “tankan” index for large manufacturers, released Monday, was 24 in March, down two points from December.<\/p>\n
The forecast continued to be pessimistic with the index expected to fall to 20 over the next quarter.<\/p>\n
The survey is seen as a major economic indicator.<\/p>\n
The index is the difference between companies surveyed that have a “favourable” outlook and those with an “unfavourable” outlook.<\/p>\n
So the reading still shows optimists outnumber pessimists but that difference is starting to shrink.<\/p>\n
A looming U.S.-China trade war after President Donald Trump’s tariffs and China’s action in response could further hurt the Japanese economy.<\/p>\n
The results also show the momentum of growth under “Abenomics” could be running out of steam.<\/p>\n
Prime Minister Shinzo Abe has been trying to wrest the economy out of decades of doldrums by fighting deflation, a continuing spiraling down of prices that deadens the economy — an effort that has met with some success.<\/p>\n
But the Japanese economy is heavily dependent on exports and hurt by a shrinking of its labour force.<\/p>\n
“Softer than expected tankan for large manufacturers marked by first slippage, albeit modest, in eight quarters being attributed to a stronger Japanese yen,” says Vishnu Varathan, of the Asia and Oceania Treasury Department of Mizuho Bank.<\/p>\n
A strong yen erodes the value of Japan’s exports when converted into yen.<\/p>\n
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Follow Yuri Kageyama on Twitter at https:\/\/twitter.com\/yurikageyama<\/a><\/p>\n